Galaxy Entertainment Group (GEG) has submitted Requests for Information to seven different Japanese cities and prefectures as part of its bid to win a Japan IR license, the company’s Deputy Chairman Francis Lui revealed on Tuesday.
The seven potential locations currently targeted by GEG include Osaka, Hokkaido, Nagasaki, Wakayama and Aichi prefectures as well as the cities of Tomakomai in Hokkaido and Yokohama.
Speaking at a special media roundtable event in Tokyo, attended by Inside Asian Gaming, Lui explained that Galaxy is yet to make any decision on a preferred location for a Japanese IR.
“At the moment we are continuing to study all the cities that are interested to have an IR in Japan,” he said. “We have had our office in Japan for a few years now and have been talking to, listening to, understanding various parts of Japan – how an IR would be able to help the local economy.
“Different cities have different needs or different requirements and preferences. Bigger cities like Osaka and smaller cities like Wakayama – each of them have their own uniqueness and own preferences which is why we need to understand more before we make a decision.
“So far we have been very actively participating in RFI. We have already made proposals to [seven cities and prefectures] … we have written to them to help them understand a bit more about what Galaxy as a company would be able to bring to their cities.”
Lui added that the non-gaming facilities contained within any IR GEG was to develop in Japan would be determined by which city the company ultimately partnered with.
“We want to be complementary,” he said. “For example, in a city like Osaka we would not be building a theme park such as a Universal Studios and we won’t be building a baseball park in Osaka either because we don’t want to build facilities that would be competing with existing facilities.
“We would like to do something else that would be complementary to the city and the establishments there. That’s why we need to learn what we can do for each city – that’s our approach.”
Asked about any minimum stake GEG would expect to have as part of a consortia, Lui said he remained “open-minded” on how any such partnership might work. Galaxy has already found one partner in Monaco’s Société des Bains de Mer (SBM), with their partnership made official in May, although it is anticipated that any winning bid will also require one or more local Japanese partners to be involved.
“I think we always need partners and in a country like Japan, we are only a guest of the country so we need local partners to be able to do an IR the right way,” Lui said.
“We are always looking for good, reliable Japanese partners to be helping the consortium … but on a shareholder level it is something we can’t answer at the moment because like in any international practice we have to decide which partner will do what.
“At the end of the day I believe the equity and the responsibility should be shared equally. Before that happens we must understand what are the responsibilities of ourselves and what are the responsibilities of our local partners.
“I think it is too premature for us to say what we must have. We need to sit down and discuss it pragmatically.”
Lui also took the opportunity to promote Galaxy’s IR credentials, coming off a highly successful 2018 which saw strong revenue growth from the company’s Macau operations across all sectors. That growth included a 22% year-on-year increase in net revenue to HK$13.9 billion in 2Q18 and a 6% increase in the third quarter to HK$13.0 billion. GEG’s 3Q18 results came despite bad luck at all three of its Macau IRs and the closure of casino operations for 30 hours in August due to Typhoon Mangkhut.
“On the outside, we think we have the execution capability that is being well demonstrated with our success in a short 15 years in Macau,” Lui stated.
“Galaxy Macau has already become the number one IR in the world in just eight years. If you look at the balance sheet, we have over US$4 billion in our bank account and are without debt.
“So we are capable of building whatever size is needed. We don’t have any problem reaching any size and scale but we need to understand what a city needs before we start building.”
Among the primary concerns facing all potential operators is widespread public opposition to the building of casinos in Japan, with multiple opinion polls showing that the majority of residents do not support the development of the nation’s IR industry.
Lui said there needs to be a joint effort between operators, government and media to educate the public on exactly what an IR represents.
“We have to do it together to make the IR more understandable to the Japanese population,” he said. “Of course seeing is believing which is why we always encourage people to come to places where there is an IR to see for themselves what an IR can do. It is not just about gaming.
“We understand that this is a new industry and we need to be careful because an integrated resort is something that the general public do not completely understand. I think it is important that we try to explain the pros and cons of an IR to the general public to buy more consensus before we start building.”
